Bitcoin Forum

What are Bitcoin's barriers to entry? Why can't a competitor pop up who is backed by more respected, well known investors, promise to limit their money supply to 1/2 of that of Bitcoin's, and eat Bitcoin's lunch? It seems that until a critical mass of users adopt a single virtual currency thereby giving it a network effect advantage, its anyones game. Anyone remember MySpace?

http://en.wikipedia.org/wiki/First-mover_advantage

I'd hardly say that bitcoin has been adopted by enough people to garner any sort of first mover advantage whatsoever. Imagine a new virtual currency starting up tomorrow with celebrity endorsements and millions in advertising. What if Paypal or the credit card companies decide to jump in the mix?

Paypal and credit card companies have an established framework of facilitating transactions albeit with large fees. It would not make sense for them to implement a new cryptocurrency. It would only cannibalize their existing business.

First mover advantage applies because bitcoin is currently the most mature cryptocurrency on the market. It has withstood many obstacles since inception (bugs, forks, 2 bubbles, etc.) and is still holding strong. The thousands of alternative coins on the market don't have as large a user base and haven't demonstrated any marked improvement over bitcoin.

The situation in which an operator starts a new virtual currency with millions in advertising is unthinkable. No one would take on that much financial risk. You have to take into account the infrastructure that is already part of bitcoin: multiple exchanges, ATMs, BitPay, etc. Infrastructure like this cannot be easily replicated. It takes years of effort.

It's called Ripple.  ;D (except for the limiting coins thing)

The problem is, the only way you will get millions in advertising is if it's backed by a commercial entity; a commercial entity has to make money to justify its existence, and it wouldn't be possible to make something as popular as Bitcoin if there was a bottom line to worry about.

What are the things people don't like about Paypal? Fees and arbitration. But how could Paypal exist without taking fees? And they probably wouldn't get away with ignoring claims of unauthorized payments, etc.

You can see similar problems with Ripple: the currency is 100% premined, and the company is holding a huge amount of the currency in case it becomes valuable. For that reason alone a lot of people are turned off by it and it's having a hard time becoming widely adopted by the Bitcoin crowd.

(Note to self: Look back at this post in 2 years when Ripple is the only successful cryptocurrency left standing and slap palm to face)

I guess in theory, you could say Satoshi created bitcoin to get rich on the coins he mined in the early days. But he didn't invest millions to advertise bitcoin, so no one thought that was his motivation. In terms of creating a popular cryptocurrency AND keeping your financial motivations hidden (or having none), the first mover advantage goes to Bitcoin alone!